Induction motors that typically used for compressors and fans in air conditioning systems are sized to handle maximum load under worst case conditions and then leaving them to run at full power. They are basically fixed-speed motors. Their speed is determined by the constant frequency of the power supply (typically 50 or 60 Hz).

Variable speed drives (VSD) or frequency inverters are solid-state devices and save energy whenever electric motors run at less than full power. VSD is actually a frequency converter in which 50Hz or 60Hz ac input voltage is first rectified into dc which is then converted back into variable-frequency ac voltage. It must be noted that the power demand of motor varies with the cube of the motor speed, i.e. power is proportional to (speed)3.

This means that a reduction of speed by 20% will result in reduction of power consumption by nearly a half, i.e. 50% saving. Since most HVAC equipment seldom runs at full power, significant energy savings can be made with these variable speed drives.